Product U23N has been considered a drag on profits at Jinkerson Corporation for some time and management is considering discontinuing the product altogether.Data from the company's budget for the upcoming year appear below:
In the company's accounting system all fixed expenses of the company are fully allocated to products.Further investigation has revealed that $144,000 of the fixed manufacturing expenses and $93,000 of the fixed selling and administrative expenses are avoidable if product U23N is discontinued.The financial advantage (disadvantage)for the company of eliminating this product for the upcoming year would be:
A) $15,000
B) $143,000
C) ($143,000)
D) ($15,000)

Question

Product U23N has been considered a drag on profits at Jinkerson Corporation for some time and management is considering discontinuing the product altogether.Data from the company's budget for the upcoming year appear below:
 In the company's accounting system all fixed expenses of the company are fully allocated to products.Further investigation has revealed that $144,000 of the fixed manufacturing expenses and $93,000 of the fixed selling and administrative expenses are avoidable if product U23N is discontinued.The financial advantage (disadvantage)for the company of eliminating this product for the upcoming year would be:
A) $15,000 
B) $143,000 
C) ($143,000) 
D) ($15,000)

Quizplus · Accepted Answer

11ea7761_15f3_70c2_81a5_9f9b6958097b_TB2580_00 The segment margin of $143,000 would be lost if product U23N were dropped.

Product U23N Has Been Considered a Drag on Profits at Jinkerson